Connectivity can often be taken for granted in the U.S., where seemingly every block in a major city has free WiFi. But in much of rural America, connectivity can be a significant fight.
Subscribe to the Crunchbase Daily
Some of those issues could be eased with President Joe Biden’s $2.3 trillion infrastructure spending plan, which includes $100 billion for greater broadband access that could in turn open up the rural U.S. to more connected and edge devices, and be a boon for agtech investors and startups.
“Connecting produce all the way to the consumer — being able to better connect upstream data to downstream — would be big,” said Nolan Paul, who leads food and agtech investment at Palo Alto, California-based Yamaha Motor Ventures.
Agtech already has seen increasing investor interest, according to Crunchbase numbers. While not approaching the funding numbers of enterprise software or fintech, agtech funding in the U.S. increased from about $1.8 billion in 2018 and $2.4 billion in 2019 to $3.3 billion last year. This year already has seen more than $1 billion invested in less than four months.
While U.S. investments dollars are on the rise, deal flow dropped slightly last year, from 317 funding rounds in 2019 to 251 last year. This year has witnessed 83 deals announced.
Those numbers could see an uptick if the proposed broadband plan becomes reality — something that is still far from certain — according to those who watch the agtech sector.
Better connectivity could mean more sensors and edge devices, which could mean more data and lead to more innovation. While it is important to note the plan does not mention 5G, even 5G requires some fiber installations, something increasing broadband would include as it builds out a better communication infrastructure.
“Investors like to build on good infrastructure,” said Nate Williams, founder and managing partner at San Francisco-based Union Labs, which invests in technologies like automation and AI with commercial applications in sectors including agtech.
Tim Brackbill, co-founder and CTO of farming robotics company Tortuga AgTech, said while it’s possible to implement advanced tech on LTE connection in rural areas, it’s expensive and slow — and sometimes even that is not available.
“Better internet access on farms would help in non-obvious ways,” he said. “Rural broadband access would certainly help more advanced technologies like our Tortuga harvesting robots and other tech, but we’ve seen that getting stable internet at a site even enables older tech like monitoring security cameras.”
Williams said due to connectivity issues, the agriculture sector still struggles with the process of just getting accurate data and converting it into usable insights that can lead to better practices.
“There’s no doubt agriculture is ripe for disruption,” said Kiersten Stead, managing partner at San Francisco-based DCVC Bio, which invests in therapeutics as well as improving agriculture and food. Stead added the sector has struggled for decades with communication issues mainly due to expense.
While venture capital flow has improved, Stead said she sees large rounds going to later-stage companies. She also sees more investment in “downstream” technology such as processing and supply chain, not in actual “upstream” endeavors like the actual production of food itself.
“Better communication would certainly make investing more attractive” at the field level, she said. “We need an infrastructure.”
Robotics and autonomous platforms that help with farming are of immense interest as connectivity improves, especially considering the safety and labor shortage issues farming is gouging through, Stead said.
Union Labs’ Williams said several deep technologies likely will attract investors if connectivity improves, such as supply chain monitoring and innovations around “precision agriculture,” which can detect micro-climates and plant changes for better yields. Even geo-location technologies to help farmers understand where livestock is moving could be of interest.
“There are just so many practices that need to be modernized,” said Katherine Sizov, co-founder CEO of Philadelphia-based Strella Biotechnology, a biosensing platform that predicts the ripeness of fruit. “We’ve created a system that is inefficient.”
Sizov said it is estimated nearly a third of all food is wasted before it has a chance to be consumed. There is no doubt that through better information and technology — helped by connectivity — that can be changed.
“Connectivity helps build a smart food chain,” she added.
Paul added that it is also important to note “rural” broadband does not just denote middle America. There are connectivity issues that have hindered farming in coastal states as well, where specialized horticulture farming of produce like berries and grapes often takes place.
In fact, Paul said, it is often that more high-touch farming that runs into labor shortages — as more workers are needed — and has been more likely to adapt to IoT and connected devices as they yield higher-margin produce.
While it’s difficult to say where the infrastructure bill and its broadband spending proposal will go, Paul said he has seen an increase in interest — and valuations — in the agtech space as people have become aware of sustainability and climate change. In 2016, Paul said he attended an agtech conference in London that attracted about 70 people. That same conference today brings in more than 1,000 people.
Nevertheless, those in agtech would love to see connectivity driven deeper into a sector that often is slow to change.
Brackbill said faster internet simply lowers the startup cost and operational friction to “just try” new technology in a rural location.
“If engineers and entrepreneurs could show up to any farm location in America without having to worry about hours and days of setup, costs, speed, reliability and ongoing maintenance of currently poor internet infrastructure, they’d save a huge amount of time and aggravation for both them and their farmer partners.”
— Christine Hall contributed to this article.
Illustration: Dom Guzman
Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.